What is FHA?

What is FHA?
The National Housing Act of 1934 established the Federal Housing Administration (FHA). In 1965, the FHA becomes part of the US Department of Housing and Urban Development(HUD). Since 1934, the FHA and HUD have insured over 34 million mortgages.

The FHA has also been active in financing the development of multi-family housing. The FHA loan process requires borrowers to have no foreclosures in the past three years and no bankruptcies in the past two years. FHA current down payment requirement is 3.5%. For many years FHA rules require every borrower to put down a minimum of 3.5 present to qualify for a loan. However, this year the organization raised that minimum that amount to 10% for borrowers who had a FICO score (credit score) lower then 580 in order to protect its financial reserves.

What is the limit for the amount of an FHA loan?
It depends on the market of the property being purchased. FHA limits are set on the basis of local area median home price. In low-cost areas, the limit is $271,050, but it could go as high as $729,750 in high cost areas. You can find the FHA's loan limits for your market at http://www.fha.com/lending_limits_state.cfm?state=MARYLAND

If you decide to seek an FHA loan there are certain guidelines that Agency loan counselors will want you to meet. Two of the most important are the relative amounts of your mortgage and your household income, and the monthly mortgage payment in relation to your total monthly debt obligations.

Generally, the FHA will want your mortgage payment (generally meaning principal, interest, property taxes and property insurance — PITI) to be no more than 31% of your gross monthly income. Further, your total monthly debt obligation including the mortgage; credit cards; auto loans; student loans; etc. should come to no more than 43% of your monthly income. These ratios are more generous than many that you will find for non-FHA loans being offered today. Even higher ratios are available if you are purchasing an energy-efficient home. The so-called “stretch” ratio is 33/45 — 33 percent for PITI and 45 percent for all ongoing monthly payments. The FHA requires an appraisal of the property. Beyond physical inspection, the applicant must disclose all “sales concessions” to the appraiser. Those may include loan discount points, origination fees, interest rate buy downs, closing cost assistance, payment of condominium fees, builder incentives, down payment assistance or monetary gifts. The FHA has a list of closing costs which it considers reasonable and customary. Those include:

•Lender’s origination fee (one percent maximum)
•Attorney’s fees
•Appraisal fee
•Inspection fee
•Title insurance and title examination fee
•Property survey
•Credit reports (actual cost)
•Transfer taxes and recording fees

If you are looking to buy condo from condo building - half of the units must be occupied by their owners. The condo must also be thre borrower's primary residence. Additionally, the building must meet FHA and HUD standards. To find out if the development has been approved, go to: https://entp.hud.gov/idapp/html/condlook.cfm

If you still have questions about FHA,
please call Tatyana: 443-527-4375

3 must-knows before backing out of purchase contract

By Tara-Nicholle Nelson
Inman News®

Question: I have a contract on a home to purchase, but I have changed my mind. Can I back out prior to the closing without any penalty or repercussions?

A: That, as it so often does, depends. First: the formalities. Depending on your state, it's highly likely that the real estate purchase contract you signed offers some sort of an out, with conditions. In some states, these are known as contingencies -- basically, contractual provisions that allow the buyer to back out of the deal within a set number of days.

These provisions usually also give the buyer the access and opportunity to have the property inspected and appraised, to have her loan underwritten, and to undo the deal, without penalty, if her loan is not approved or the property condition does not meet her standards within the agreed-upon contingency period (usually around two weeks, plus or minus a couple of days, by default, but the time period itself is fully negotiable between buyer and seller).

In other states, the relevant provisions provide an objection period in which the buyer must voice her objections or intent to back out, or forever hold her peace.

At the end of an objection period, a buyer usually retains the right to back out, but will forfeit any earnest money deposit she placed on the property if she bails. At the end of a contingency period, the buyer must either:

•remove the contingency, signaling that she plans to close the deal, and rendering her deposit nonrefundable if she doesn't;
•exercise the contingency, killing the deal; or
•request an extension of the contingency until her outstanding due diligence is complete.
Those are the basics, but there are two important caveats if you happen to be buying a distressed property. If you're in contract on a short sale, your contingency or objection period likely doesn't even begin to elapse until you've received the bank's approval of the deal.

If you change your mind before that happens, chances are good that you can back out, penalty-free.

On the flip side, if you're in contract to buy a bank-owned property and you're in a contingency state, chances are good that the bank has effectively converted the contingency period into an objection period, so that your deposit becomes instantly nonrefundable if you haven't backed out of the deal by the end of your contingency period.

Hopefully, you know where your own contract falls within the above schemes. If not, check with your agent or attorney to understand whether you can actually back out, under the terms of your contract with the seller, without penalty.

With that said, just because you can back out doesn't mean you should. Buying a home is sort of like getting married in that anyone who takes it seriously will have a moment (or day, or week!) of doubt.

If the fact that a few thousand dollars' penalty would sway your decision in favor of moving forward with the transaction, that might be a sign that your desire to back out is just buyer's remorse.

Alternatively, if you're in contract on a short sale you're not sure actually can or will close and you happen to have found another property you like better, at the right price, that is more certain to close (i.e., is not a short sale), your change of mind might make more sense.

The inevitability of buyer's remorse at the prospect of such a major commitment as a mortgage is why I suggest buyers-to-be actually write down their "visions of home," getting clear on what they want their lives to look like on a daily basis once they own the home they envision, and determining what characteristics, features and amenities a home would need to have to facilitate that vision.

When buyer's remorse rears its head, it can be a useful exercise to revisit any written documentation you have of your original wants, needs, priorities or vision; compare the home against that; and use the comparison to quell any emotional freak-outs that might incline you to back out irrationally, or supply logic and reason to a rational decision to cancel the contract.

Finally, if a serious problem with your job, loan, health or life is what's making you want to back out, it might make sense to cancel the contract even if you will incur a penalty for doing so.

I've personally worked with buyers whose marriages broke up or jobs were lost during escrow, but after removing their contingencies they were happy to leave the transaction and forfeit their deposit knowing that doing so allowed them to escape the greater evil of being stuck with a home and a mortgage that is simply not going to work with their changed circumstances.

Howard County Land Records

http://www.courts.state.md.us/courtrecords.html

6 Keys to Ensure an Approved Home Mortgage

Qualifying for a mortgage might have been easier just a few years ago, but today’s tight lending standards help ensure borrowers have the financial ability to keep the homes they buy as long as they want to. If you’re applying for a mortgage today, here’s what you can do to ensure you quality:

1. Boost your credit score to 740 or higher. Though loans are available to borrowers with lower scores, with a FICIO score of 740 or higher you’ll get best interest rates and lowest down-payment requirement.
2. Provide your income. Lenders like to see consistent income over a period of two to five years. Of course, you’ll also need enough predictable income to handle your monthly loan payment, along with property taxes and insurance.
3. Flash the cash. The more down payment you invest in your home, the better risk you are considered by lenders. Lenders consider a 20% to 30% down payment ideal, with a solid emergency fund of four to six times monthly income. You may get a loan with less, but why not to go for the gold?
4. Minimize debt. Pay down credit cards and retire car loans debt, etc. to improve your debt-to-income ratio, leaving more room in your budget for mortgage debt.
5. Tell the truth. Your loan application information will be verified through the underwriting process. Remember, incomplete or false disclosures will simply derail lender confidence in you.
6. Avoid last-minute gaffes. Lenders will calculate your debt-to-income ratio at the beginning of the loan process. They’ll also pull your credit report justr before the settlement. Don’t change the picture by depleting cash resources, increasing debt or opening new credit accounts.

Call me if you have any questions: 443-527-4375

Pros and cons of a life estate

Here is a general overview of the benefits and burdens of a life estate:

Real estate taxes: It is the general rule that the life tenant is responsible for paying all property taxes during his or her lifetime; if the document creating this estate is silent on rent, the life estate holder does not have to pay any rent.

Ordinary repairs, upkeep and maintenance: These are the responsibility of the life tenant; that person lives in the house and it is his or her obligation to preserve the property.

Improvements: This question comes up often. "I, the life tenant, want to make improvements to the house. Who pays for this?"

Ordinarily, a life tenant has no right to make permanent improvements to the home. If they are made, without the consent of the remainderman (i.e., the person who gets the property at the end of the life estate), it is at the expense of the life tenant. However, it is the obligation of the life tenant to make all of the necessary repairs so as to preserve the property.

Homeowners insurance: Unless specifically spelled out in the will, the life tenant is responsible only for insuring his or her interest, while the remainderman has the obligation to insure the remainder interest. Sounds complicated and confusing, but the insurance carriers can assist in resolving this.

Can the life tenant move out and rent the property? The law provides that a life tenant is entitled to both the possession and use of the property. Included in this "use" is the right to rent the property to another, and keep the rent money. However, any such rent would be taxable income to the life tenant.

Can the life tenant sell the interest? The answer is yes, but the potential buyer would get only what the seller has -- namely an interest that would end when the seller dies.

What rights does the remainderman have? The courts seem to treat a life estate as they do tenants. The general principles give the life tenant the right to peaceful possession without interference from the remainderman.

However, if it appears that the life tenant is not properly maintaining the property, he or she would have the right to inspect and make any necessary repairs. This may require court action.

There may be tax consequences of giving a life estate, and you have to discuss this with your own tax advisers.

Keeping your home secure

Keep your Home Secure

At the end of summer owners of lake cottages and mountain retreats find themselves locking up for another year. Unfortunately, many owners do not leave their vacation homes very secure against burglaries.
Although there no fool-proof way to prevent a burglary, making things difficult for criminals is the best defense. These tips apply not only to vacation homes, but to your primary residence as well.

• Make your home look lived in. Add timers to lights so they go on and off in different rooms at different times. Consider leaving a light on over the stove to show that the most-used room is active.
• Secure all entry doors. Using a foot lock to jam doors can delay entry and deter burglars.
• Add motion-detector lights outside your home or put lights on timers. Ensure outdoor lights are mounted higher than someone can reach without a ladder to deter thieves from removing the bulb in order to work in darkness.
• Use a timer to leave a radio playing to sound like someone home. If you have a landline phone, turn down the volume so unanswered rings don’t get attention. With an answering machine /voice mail, don’t give details that the home is closed up for season and check to clear messages regularly.
• Determine what can be seen though open window coverings and close those that reveal too much while leaving others open on the second floor.
• Keep in contact with your neighbors. Inform trusted, local year-around residents of your schedule and of any service schedules. Provide them with contact information and consider leaving key with them for emergency. Ask them to pick up flyers, phone books, newsletters that collect on the front door and driveway.
• Consider installing security system for more peace in mind
• For the greatest security, hirea caretaker to live in the home or management company to check on the home regularly and conduct off-season maintenance /service.

3 keys to qualify for mortgage using cash income

3 keys to qualify for mortgage using cash income

By Tara-Nicholle Nelson
Inman News™

Q: For the past year I have been holding two part-time jobs: one job pays me in cash only and the other pays me with a traditional paycheck. The job that pays me in cash allows me to save about $3,000 per month, which I put into a savings account, so I have quite a bit of cash saved up. I am planning to buy a house within the next year. I would like to use this savings toward my down payment. Will this be questioned or cause me problems?

A: First, you should be very proud of yourself for having the discipline and drive to both work two jobs and to save up such a significant amount every month. But you're smart to ask in advance about how your cash income will be construed by lenders. In terms of your down payment, all funds that have been in your accounts for two months or longer at the time your loan is being underwritten are presumed to be yours by a lender.

Your bigger challenge will arise in the event that you want or need the lender to consider that $3,000 per month in cash income as part of the income that qualifies you for the mortgage. If so, there are several things you'll need to put in place.

First, if this is a part-time job, you'll probably need to be able to document that you've been there at least two years for the lender to allow you to use it to qualify.

Second, be prepared to produce a letter from your employer, known in the industry as a continuity letter, essentially verifying your employment and indicating that your employment is "expected to continue."

And third, as with any sort of income, you will be required to produce two years' worth of federal income tax returns; the bank will average your taxable income from the last two years and use that as the baseline income upon which you'll be qualified. (If you haven't been paying taxes on your cash income, but you will want or need to use it to qualify for a home loan, now's the time to meet with your tax preparer and your mortgage broker and evaluate whether it makes sense to file an amended tax return and pay the appropriate taxes on your income.)

Depending on the specific facts of your situation, your lender might require you to jump through additional hoops in terms of documenting that income; on the other hand, you might not need the income to count for mortgage purposes if you can qualify for a large enough home loan on the basis of your traditionally paid income.

Long story short: Loop your mortgage broker or other lending professional in on your situation, stat, so you can begin the process of positioning and documenting this income to make the most of it in your mortgage application and qualification process.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com

Five steps to improve your credit score

Strong credit affects many aspects of your daily life, including your ability to purchase a home. Looking to improve your credit score?

The Board of Governors of the Federal Reserve System offers five tips for doing so. Here is what they recommend:

1. Get copies of your credit report-then make sure information is correct. Go to www.annualcreditreport.com. This is the only authorized online source for a free credit report. Under federal law, you can get a free report from each of the three national credit reporting companies every twelve months. You can also call 877-322-8228 to request Annual Credit Report.

2. Pay your bills on time. One of the most important things you can do to improve your credit score is pay your bills by the due date. You can set up automatic payments from your bank account to help you to pay on time, but be sure you have enough money in your account to avoid overdraft fees.

3. Understand how your credit score is determined. Your credit score is usually based on the answers to following questions:
• Do you pay your bills on time?
• What is your outstanding debt?
• How long is your credit history?
• Have you applied for new credit recently?
• How many and what types of credit accounts do you have?

To learn more about credit scoring, see the Federal Trade Commission’s website: Facts for consumers:
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm

4. Learn the legal steps to take to improve your credit report. Read the Federal Trade Commission’s “Building a Better Credit Report” http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre03.shtm
It has information on correcting errors in your report, tips on dealing with debt and avoid scams- and more.

5. Beware of credit - repair scams. Sometimes doing it yourself is the best way to repair your credit. http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm It explains how you can improve your creditworthiness and lists legitimate resources for low-cost or no-cost help.

Do you have questions?
Call Tatyana Baytler
Phone: 443-527-4375

12 Steps to a Successful Settlement on Your Dream Home

Just as with a GPS system, to get an accurate complete road map to your destination , you need a starting point and an end point. Following below steps, will help you to navigate Real Estate settlement transaction and to get to your desired destination - new home.

1. First: Get “Pre-Approval” letter by reputable lender or mortgage broker.
2. Second: Write up the list of housing desires /wishes (house futures, location and etc.)
3. Third: Get the knowledge of the state of the market and get understanding why it is an excellent time to buy. Search for your home and see them.
4. Fourth: Once you have identified the best property to buy and ready to enter into the bid/ contract process, ask agent to see comparable recent sold homes and provide to you Comparable Market Analysis (CMA) and /or order appraisal. Make an offer for your new home - sign all offer documents an agent provided to you. Write a check for your escrow account (deposit is hold in Trust account until you are ready to settlement and it will be used toward your settlement charges)
5. Fifth: Once contract is fully ratified / executed (signed by sellers and buyers), contact the lender and get a commitment letter from the lender not later then 10 business days from contract acceptance. Lenders are required to provide borrowers with a Good Faith Estimate (GFE) of closing costs and Truth in Lending Disclosure within 72 hours of application.
6. Sixth: Contact the lender to make sure providing all required documents to render a final loan approval. Ascertain that an appraisal has been ordered and the date scheduled.
7. Seventh: Hire licensed home inspector. Get the inspection report. If necessary, re-negotiate contract and provide updated version to the lender.
8. Eighth: Communicate with the lender every couple of days to ensure all elements of the loan process are in order and proceeding in accordance with the contract commitment date.
9. Ninth: When you have received the formal loan commitment, coordinate directly with lender to make certain any and all underwriting conditions have or will be satisfied.
10. Tenth: When the lender’s commitment letter is received, in coordination with the agent, order title work and schedule the settlement date and time acceptable to all parties.
11. Eleventh: Find insurance company for your new home. Insurance policy’s effective date must coincide with the settlement date.
12. Twelfth: Ask the agent to order Home Warranty for your new home.


If you are consistent and realistic about all of above real estate transaction steps, while enlisting your "Team of Experts" - your real estate agent, lender, inspector, title company / attorney, you will successfully settle on the home of your dream. Be persistent. Good luck!

Tatyana Baytler
443-527-4375
www.LagretRealEstate.com

5 Home Projects to Finish Before Labor Day

If the back-to-school radio or television commercials haven’t clued you in yet, summer is nearly over and with that, so will be the longer days and warmer temperatures.

Now is the time to finish up those home improvement projects sitting at the top of the to-do list before Labor Day and the beginning of fall.

Curb Appeal Projects

Get going on outdoor projects that can increase your home value and up your curb appeal, such as exterior painting, landscaping or installing a new front door. Paint won’t cure in cold or wet weather, so tackle this big project before the weather takes a turn.

Clean and Caulk Windows

Make things a bit clearer by taking time to clean the outside of your windows. While you clean them, take note of any cracks or any places that may need caulking. Sealing your windows (and doors) well will ensure your home stays warmer and your utility bill stays lower during the colder winter months.

Scrub and Seal Your Deck

Your deck gets a beating year-round from rain and snow and freezing temperatures during the winter and sun and dry air during the summer. Give it a scrub with approved deck cleaner to get rid of mold, then apply a stain or sealant to protect it from rain and snow during the upcoming months.


Clean out the Garage (or other spaces)

It’s no fun to labor in a garage in the dead of winter, so get de-cluttering and organizing now when the weather is nicer. Donate unwanted items to charity or host a garage sale.

Seal the Driveway

If you’re seeing cracks or holes in your driveway this summer, they will most likely get worse with winter weather. Seal or repair your driveway to prevent further damage. Additionally, asphalt pavement doesn’t cure as well in cold weather; if you are considering a paved driveway, summer is the time to do it.

June Howard county Market Uprate

FHA loan requirements could change

House Republicans have proposed a bill to "strengthen FHA" by raising the minimum down payment for FHA loans from 3.5 percent to 5 percent.

They also want to prohibit FHA borrowers from financing their closing costs and to lower the limits on FHA loans (FHA's maximum loan limits are already scheduled to fall in October. The bill suggests making them even lower).

If approved, the bill could significantly increase the upfront costs of buying a home with an FHA mortgage.

But if you are on the market for a home and have just finished saving enough money for a 3.5 percent down payment, there is no need to panic -- yet.

The proposal is just a draft at this point and is expected to face great resistance when legislators start discussing it Wednesday during an Insurance, Housing and Community Opportunity Subcommittee hearing.

Ron Phipps, president of The National Association of Realtors, a strong opponent of the bill, is scheduled to testify during the hearing.

He says NAR supports "reforms to strengthen the program" but "changes should not be made at consumers' expense by drastically impacting the affordability and availability of mortgage capital."

A higher down payment requirement would only increase "the number of creditworthy borrowers ineligible for home ownership and does little to reduce risk of default," he says.

Proponents of the bill say by having more skin in the game borrowers would be less likely to default, which would help improve FHA's finances and protect taxpayers.

Yeah, too bad they are a few years and some $700 billion late.

Why didn't legislators think of introducing this bill in say, 2004, when FHA was insuring mortgages for lenders who gave out loans with their eyes closed? Maybe it's because they were too busy pushing for the Zero Downpayment Act of 2004.

Ironically, on March 24 2004, members of a former housing subcommittee sat in the same room where this bill is scheduled to be discussed Wednesday, and talked about why they thought FHA should insure loans with no down payments.

This is a statement John Weicher, who was then Assistant Secretary for Housing and Federal Housing Commissioner at HUD, made on that day:

Under this new program, FHA will insure 100 percent of the cost to acquire the home for first-time home buyers. We would allow them to finance the full purchase price, as well as all of the closing costs. Potential home buyers would not have to make the minimum down payment of 3 percent that is required in our regular Home Mortgage Insurance Program.

Studies have consistently shown that the single biggest obstacle to homeownership for most families is the inability to come up with enough cash to meet down payment and closing costs. Many potential home buyers pay the equivalent of a monthly mortgage in rent, but are unable to save toward a down payment on a home. … This Administration is committed to helping all Americans address this barrier to homeownership. … We are proud of this effort, and we are proud of the results.

And he had plenty of other proud supporters. Here is the transcript if you're in the mood.



Read more: http://www.bankrate.com/financing/mortgages/fha-requirements-could-change/#ixzz1QFPBvJWn

Sellers: New Thinking To Make A Ro0m Pop

Transforming a room from ho-hum to hip can be time consuming and expensive, especially if you don't hire an interior decorator. With a few ideas from top designers, here are some insider tips to try around your home for a quick makeover without breaking the bank.

Lighting. Found a wonderful chandelier you don't have a place for your foyer or dining room? Try it out in a bedroom to bring instant glamour and elegance.

Seating. Who says that all your dining room chairs have to match? If you have some antique chairs from your grandmother - or an estate sale - blend them at the same table with other styles - and even colors - for an instant eye-opening change to your dining room or eat-in kitchen.

Surprises. If your tableware is boring bone or bland white, splash things up by adding a few brightly-hued plates and bowls in your favorite, unexpected color. Colors will make settings glow!

Bathrooms. Turn up the hues in the bathroom to create not only a feeling of warmth, but interest as well. Change out towel colors, rug textures and few wall hangings of outdoor scenes to bring nature inside.
Don't forget to use these tips if you're selling a home. Staging with a few unexpected accents can make your home memorable to the buyers coming through on tours.

Is seller financing worth the premium price?

By Tara-Nicholle Nelson
Inman News™

Question: My wife and I have recently entered into a contract to buy a beach house in Charleston, S.C. This is an owner-financing deal where the house has no liens. We are paying $785,000 for the house, with 10 percent down. I think we are paying 10 percent too much, as the market is still dropping in the Isle of Palms.

Do you see a bottom in pricing for this type of investment? We do plan on renting it out as much as possible. Anything in particular we should look out for?
--Roger



Answer: I know human nature is not to want to be predictable or fall into a clichéd stereotype -- at least here in America it is. We all want to be respected for our individual talents, style and preferences. But the fact is, Roger, almost all buyers think they paid too much for their home -- and especially buyers in today's market, which in many areas is still depreciating, as you've pointed out.

First, you must take into consideration that you are receiving seller financing, which often comes with a premium price and a premium interest rate payable to the seller. Why? Because the seller is taking on some level of risk by virtue of forgoing the possibility that a buyer who can pay the full price would come along and buy the place, allowing them to cash out.

And they are often doing so on the word of someone who couldn't qualify for a loan to buy the home otherwise -- either because they are credit-, income- or asset-impaired or, as may be your situation, because a mortgage lender requires 25 percent or 30 percent down on an income property, while you may be willing or able to put down only the 10 percent you mentioned.

Additionally, seller financing can favor the buyer in that many of the mortgag-qualifying hoops through which both the buyer and the property would have to jump are eliminated, as are many of the costs that accompany mortgage loans, like origination fees, doc fees, and the like.

That's a long way of saying that I do believe some premium price is acceptable for seller financing. What the premium is is negotiable, but if the market could bear a lower price for the home at the terms on which you're buying it, it seems that you would have negotiated that lower price upfront.

I can't predict what the bottom of your investment is, but I can give you a number of things to watch out for. Because there's no mortgage lender demanding it, many buyers of seller-financed properties forgo protections like home inspections, title searches and title insurance. Don't fall into this potentially costly trap. Make sure you get these items done, and that you obtain hazard insurance on the property, effective the date the transaction closes.

Also, I'd encourage you to have a real estate attorney work with you and the seller on the contract and the seller-financing documents, as well as to record them with the county recorder's office.

This should prevent any of the tragically unfunny funny business that occasionally happens with seller-financed properties, like the one where the seller goes out and takes on a bunch of new mortgages against the property, then defaults on them, pocketing the buyer's cash and leaving them to be evicted when the house forecloses. That's certainly a worst-case scenario, but recording your interests in the property publicly will avoid this and a myriad of lesser evils.

In terms of evaluating your investment, for all but the most seasoned rehabbers buying foreclosures at extreme discounts, I am discouraging investors from the flip mentality of trying to project out when they'll recoup their money and how much their return will be.

At this moment in time, in your situation, you should not buy at bizarrely inflated prices, but your focus should be much more on (a) planning to hold the property over the very long term, which is absolutely necessary to stack the decks against losing money on the deal, and (b) projecting out completely accurate and favorable cash flows from the property -- before you buy.

Talk with property managers and other rental property owners in the area to get a realistic sense for how frequently their homes are rented out, and at what rate. Build in easily forgotten line item expenses like local business income taxes (which are often charged to landlords of vacation homes, as many cities consider them to be businesses), insurance, property management, and age- and weather-related maintenance reserves.

Do that math and talk with your tax adviser before you remove contingencies or otherwise finalize the deal. And good luck!

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

Am I ready to Buy a Home? Test for Readiness

Simple test give you the answer if you are ready, just answer 'yes' or 'no' to each question below.

1. Do I have a current, reliable source of income?
2. Is my employment history strong for the past two to three years?
3. Is my job reliable?
4. Do I pay my bills on time?
5. Is my credit score not low ( above 640)?
6. Do I have few loans that are current or recently paid off that illustrate my creditworthiness and payment history?
7. Do I have a downpayment (20% of purchased price) to buy today?
8. Am I able to pay a monthly mortgage payment, property taxes and insurance and manage repairs and/or maintenance of the home? ( Ideally, having a savings cushion of 4 -6 month of living epenses is good planning)

--------------------------------------------------
If you've answered yes to all of these questions, you are ready to start shopping for new home. Congratulations, it is time to call me and see that is your situation and what home fits your financinal picture.........

Crime statistics in Howard County Maryland

Once I have been asked to provide crime statistics to the family with small kids moving in to the area. I made a research on line and found few helpful web sites.

1. Crime report ( Crime Reports). You can search the address and accidence by the address displayed around your searched area. This is very good because it's break down the crimes by categories and shows addresses of sex offenders. Also, you can create an alert when event /accident is registered you get the notification by email.

2. Crime statistics ( Crime Statistics). This web site give you visual map where you can click on the place and it gives you the summary of accidents occurred in that area

4 Commercial Investor Tips

Emerging Trends in Real Estate 2011, an annual investor survey conducted by PricewaterhouseCoopers and the Urban Land Institute, offers these investors tips.


1. Lock in loans. Don’t make the mistake of waiting for loose credit that may be a long time coming. Interest rates are low but will inevitably increase.



2. Hold REIT shares. REITs are all about yields (forget appreciation) and a solid dividend in an uncertain environment. Even with recent REIT value run-ups of 28 percent in 2010, according to the National Association of Real Estate Investment Trusts, funds with high-quality assets should be less volatile than most stocks.



3. Buy land if you can afford to hold it. Developable land prices are cheap, although the wide bid-ask spread is still a challenge for buyers. Remember, says Rochelle, historically most of the big money is made in land plays.



4. Choose infill. Predicting the direction of new growth is tough, so central locations are somewhat lower-risk investments. Infill offers businesses a more diverse employment base, especially among younger workers who prefer urban living.





Source: Mitch Roschelle is U.S. real estate advisory practice leader for PwC, New York.

Below-the-Radar Short-Sale Issues

You could end up having to pay those outstanding incidentals if you don't work out responsibility for the seller's lenders with buyers ahead of time.

Incidental fees. In short-sale transactions, the seller’s lender typically won’t pay many of the outstanding incidental costs at closing such as title and survey fees, unpaid water bills, and overnight document delivery fees. So, you could end up having to pay those if you don’t work out responsibility for them with buyers ahead of time.



Home inspections. Given the uncertainty of obtaining the lender’s OK, it’s not unusual for buyers to want to delay ordering the home inspection until after lender approval. But such a delay can hurt buyers if the inspection turns up something they don’t like. They need to be comfortable with the condition of the house before seeking lender approval for the deal.



Contingencies. Buyers face the same contingency issues that they do in any other transaction. They need to be sure they can get financing before asking the seller’s lender to approve the deal; otherwise, after their lengthy wait for the seller’s lender, the deal might still collapse.



Client communications. During the approval process, weeks can go by with no contact from the seller’s lender. You should remain in regular contact with buyers to tell them what you’re doing even when you’re hearing nothing from the lender. If the lender eventually says no to the deal, your clients might wonder if you did all you could during the process. By checking in regularly, you signal to buyers that you’re on the job.



Distressed HOAs. Look carefully at the financial condition of the home owners’ association because lenders can throw your buyer for a loop if they refuse to make a loan for a home with a distressed HOA. From lenders’ perspective, there’s a risk of deferred maintenance and repairs and a risk of future dues assessment increases. Review the HOA’s financials with an accounting specialist, and look for elevated spending by the HOA on attorney fees.



Source: Kevin Coyne, The Coyne Law Firm, Oakbrook Terrace, Ill

Spring 2011 Market Update

6 Reasons Overpricing Does Not Pay

1. Most buyer activity comes within the first 30 days a home is on the market. Overpricing means you’ll miss that activity by discouraging qualified buyers who’ve seen similar homes for less.

2. A too-high price eliminates a whole class of buyers. Many buyers know just how high they can go and don’t even look at homes priced above their price limit.

3. Overpricing helps sell other, more competitively priced homes first. Your home’s over-market listing price makes them look better.

4. You waste time and suffer added weeks or months of stress as your overpriced home languishes on the market, preventinh you from moving on.

5. Your home may eventually be seen as “ stale inventory,” suggesting structural or mechanical shortcomings (although in realty, none may exist), even after you’ve lowered your price. A further price reduction, below true market value, may be needed to sell your home.

6. If you do get an offer, the contract may fall through because the appraisal of the buyer’s lender comes in too low. The buyer may not be able to borrow enough, or come up with enough cash to proceed with closing.

Price your home right -inside tips for serious sellers

Here are the factors we'll consider to arrive at the right listing price for your home:
1. Recent sales. In the fast changing market, using sales within the very recent past is imperative. What a property sold for last year-even six month ago- is just old news.

2. True comparables. We compare your property with similar, nearby properties called comparables, or comps.
Using true comps is key to setting the right price. We'll compare apples to apples looking at homes that are alike in terms of amenities and condition and also considering whether the comp is a distressed sale.

3. Expired. We'll also check prices of 'exprired' (properties whose listing contract ran out without a sale) and 'withdrawn from market' comparable properties. These properties may have been overpriced and the market indicated the listing price was higher than buyers are willing to pay.

4. Pending sales. When price information is available, we may use pending sales (properties under contract but not yet settled or closed), because these properties offer a trend indicator about what price active sellers and buyers are agreeing, right now, is the right price.

5. Active listings. Only closed sales truly reflect what buyers in today's market will pay. What other sellers are asking has little relation to the value of your property. Using other listings as a guide, however, is a smart way to position your property to beat the competition to the right price and great terms.

6. Appraisal. Although a seller-paid appraisal is often unnecessary, it can be an effective strategy in a situation where the seller wants to list as 'being sold under appraisal' to position a property as distinct from the competition in the area, especially where many similar properties are already for sale.

7. Online valuation. Home valuation websites that provide instant price estimates tend to be an unreliable guide to the right price. At best, these valuations give a ballpark one-size-fits-all estimate. As your area specialists, we know what your property is really worth in today's market.

8. New price. If your home has been on the market for two to four weeks, but has gotten to no traffic- or if there has been traffic, but no offers-this indicates the market believes your home is overpriced. What's more, since it was listed, other homes may have come on the market with better positioned prices. Buttom line: Time for a new price.

If you have any questions about setting the right price, call Tatyana!

5 Tax Tips, Tricks and Traps for Homeowners

Ask a roomful of homeowners what's so great about owning versus renting, and you'll hear them holler in unison: "the tax deductions!" And it's true – homeowners who itemize their taxes are able to deduct 100% of their mortgage interest and property taxes from their income tax returns.

That means that if you're in a 28% tax bracket, Uncle Sam effectively subsidizes about a third of your borrowing costs or more, making your home more affordable or allowing you to buy a larger home than you could have otherwise. Also, big chunks of your closing costs are tax deductible, and hundreds of thousands of dollars of any profit (or capital gains) that you realize when you sell your home are exempt from income taxes.

At tax time, it's critical to know what you're entitled to, so you can claim it. So, here are five essential need-to-knows about home-related income tax tips to help you get the most tax-reducing bang out of your home-owning buck – and to avoid hefty home ownership-related tax traps.

1. You Have to Itemize Your Return to Claim Your Deductions

During the recent debate on Capitol Hill about whether the mortgage interest deduction should be eliminated (it won't be, not anytime soon), it came out that nearly 40% of homeowners lose out on their major tax advantages every year when they fail to itemize their income taxes. If you own a home and otherwise have a fairly simple return, it might be tempting just to take the standard deduction – and if your mortgage, property taxes and income are low enough, the standard deduction might outweigh your homeowners' deductions. But you'll never know if you're losing out on the tax advantages of itemizing unless you try; before you grab a pen and start filling in that 1040-EZ grab those forms from your mortgage company and answer the questions on tax software like TurboTax, which will automatically do the math on whether itemizing or taking the standard deduction will result in the lowest tax bill – or the highest tax refund – for you.

2. Plan Ahead and Be Strategic When Taking a Home Office Deduction

According to the Small Business Administration, the average home office deduction is $3,686 – multiply that by your tax bracket – 15%, 20%, 30% or whatever it is, and that's what you'll save on your taxes by writing off your home office. Know, though, that the space you designate as your home office cannot be exempted from capital gains tax when you sell your home later. The $250,000 (single)/ $500,000 (married filing jointly) income tax exemption for capital gains is only good on your personal residence, after all – not including any space in your home you've claimed as your tax-advantaged office. If you foresee selling your home for much more than you bought it in the future, near or far, discuss this with your tax preparer to see if the few hundred bucks you save is worth the capital gains complication later.

3. Tax Relief for Loan Modifications, Short Sales and Foreclosures Is Only Around Through 2012

While the long-term housing outlook is beginning to look up, 2011 is projected to be the peak year for foreclosures during this market cycle. Distressed homeowners who are on the brink of a short sale, loan modification or foreclosure should be aware that normally, any mortgage balance that is wiped out by one of these outcomes is taxed as what the IRS calls Cancellation of Debt Income, or CODI.

Under the Mortgage Debt Forgiveness Relief Act of 2007, the IRS is currently not charging income taxes on CODI incurred through a loan mod, short sale or foreclosure on most primary residences through 2012. But right now, banks are taking many months, or even years, to work out mortgages in all of these ways; the average foreclosure in New York state right now occurs only after 22 months of missed mortgage payments. If you foresee any of these outcomes in your future, don't put things off. Do what you can to get to closure on your distressed home and loan, ASAP, while you won't have income taxes to add as the insult on top of your significant housing injury.

4. Project the Income Tax Consequences of a Refinance or Property Tax Appeal

Homeowners everywhere are working on applying for a lower property tax bill on the basis of the last few years' decline in their home's value. Those who have equity have flocked en masse to refinance their 7% home loans into the 4% to 5% rates of the last few months. These strategies offer some of the heftiest household savings out there for the corresponding investment in time and money they take. But here's a caveat for savvy homeowners who slash these costs: remember that property taxes and mortgage interest, the very costs you're minimizing, are also the basis for the major tax benefits of being a homeowner. So plan ahead for your income tax deductions to go down along with your taxes and interest.

5. Don't Forget Those Closing Costs

If you bought or refinanced your home in 2010, you may be so focused on your mortgage interest and property tax deductions that you forget all about your closing costs. Any origination fees or discount points that were paid to your mortgage lender at closing are tax deductible on your 2010 return, get this – even if the seller paid your closing costs. If you can't figure out exactly what you paid, look for your HUD-1 settlement statement, that legal sized paper full of line item credits and debits that you should have received from your escrow provider or title attorney at, or just after, closing. Can't find it? Drop your real estate agent or mortgage broker an email; they can usually get a copy to you quickly.

4 Savvy, Smart, Sensible Tips To Get Your Home Sold

1. Price Aggressivly. If you are eager to get your home sold, you need action. To get action for your property, you need a price that is better than good. Price to sell. Set a competitive price that motivates-maybe lower than you'd like but better than the majority of your competition. with a competitive price, you will see action, and likely lots of it-possibly even multiple bids that can bring offer prices above your listing price. Call us for details.

2. Organize, clean, stage. Before you list your home for sale, go through it from top to bottom and organize every nook and cranny. Attractive homes attract buyers. If you don't have room for items, store, sell or donate them. After this all-out organization task, clean every space in your home. Spic and span sells. After the clutter and dirt are cleared away, stage to entice buyers. Set the table, put out flowers, set up a checkers game on the family room coffee table. Finally, get an inspection and fix problems that could kill a sale.



3. Be flexible. Don't be discouraged by buyers looking for the moon. Don't ignore an offer. Every offer deserves a counteroffer. Once a buyer " falls for your home", price and terms are simply negotiation items. We'll help you negotiate effectively to get the price you want or need by coming up with creative ways to counteroffer. if you have flexibility in your timeline( when you need to move, etc.), be sure to let us know too!

4. Work with a pro. Selling strategy is what we are all about. When you choose to work with us, we'll help you sell quickly for the best price. We'll work with you every step of the selling process, answering your questions and navigating the myriad of details. Our customer service is beyond your expectations because we have the experience to navigate today's real estate market. If you are thinking of selling your home, collecting information or event ready to list, please contact us at any time. We're here to help you achieve your real estate goals!




LagretRealEstate.com
Office 443-420-7235
Mobile 443-527-4375

5 Stages of Buying Your First Home

Buying a home is not a discrete event; it's a process - a sequence of events that happens over time, sometimes over as long as several months or even years! While general guides to buying a home are a dime a dozen, I'm excited to share with you some insider secrets you may not have heard elsewhere - one for each stage involved in buying a home. Here's to helping you make the best decisions at every phase of your homebuying process!

Stage One: Deciding Whether It's The Right Time to Buy.
Insider Secret: The market is the least important factor you should consider when deciding whether and when to buy a home.
Why: Everyone knows affordability is at an all-time high. Home prices are low, and so are interest rates. But trying to time the market is a fool's errand; many who get caught up in that game of trying to make sure they buy at the absolute bottom will end up losing out on very, very favorable conditions.

Beyond that, the most important considerations when deciding whether and when you should buy a home are personal, not market driven. On today's market, it only makes sense to buy a place if it's going to be sustainable and work for you for at least the next 4-5 years [if your town's real estate market has been fairly recession-proof] or 7-10 years [if the housing/foreclosure crisis has hit your area pretty hard].

Against this "smart holding period" backdrop, smart buyers decide to buy when it makes sense for:

•their life plans (i.e., they are comfortable making the commitment to live in the same town, and the commitment to )
•their family plans (i.e., whether they plan to get married, have children or empty their nest in the time they plan to own the home - and the implications of these plans on their space needs and location priorities)
•their career plans (including, but not limited to: whether they have job or income security, whether they feel they will be working in the same area for the foreseeable future, and whether they want to work less or start their own business in the months or years to come)
•their financial plans (including foreseeable changes in income and expenses, e.g., kids going to college or making partner at the firm).

Stage Two: Getting Pre-Approved.
Insider Secret: Working with a mortgage broker referred by your real estate broker or agent may save you money.
Why: Bolstered by the real-life stories of a couple of bad apples, TV pundits and some consumer advocates have spun the tale of a real estate industry cartel, whereby sinister agents hook unsuspecting buyers up with shady mortgage brokers, who place them in crappy loans and kick back some bucks to the agent. I'm here to tell you, in my experience, the opposite is true the vast majority of the time.

When you work with a mortgage broker who has a strong track record of helping your real estate agent's clients out, you end up in a best of all worlds situation, nine times out of ten. First off, your agent will take you much more seriously once a mortgage broker they know and trust has run your credit, checked your income and approved you for a loan, as well as communicated with your real estate pro about your qualifications and what you can afford. Secondly, your agent can help you communicate with your mortgage broker, sometimes helping get past appraisal glitches or facilitating other workarounds, as they come up. Third, you get the assurance of working with a mortgage pro who has been vetted and vouched for by someone you not only trust, but someone who can verify that the mortgage broker has the ability to get transactions closed in the timely manner required of today's real estate sales contract. Otherwise, you may end up working with a competent mortgage broker who has a great track record when it comes to refinancing, but can't keep up with the pace and common obstacles to getting a home financed in the context of a sale.

On top of that, sometimes the relationship can help you negotiate out of a couple of line item loan fees (if your particular mortgage rep has the power to get them down at all), if push comes to shove and cash is tight to close the deal. Assuming you are working with a real estate pro you really trust, working with a mortgage broker they trust can save you, rather than cost you, money.


Stage Three: House Hunting
Insider Secret: "Distressed" doesn't always equal "discounted" - in some cases, a "regular" sale can be a deeper deal.
Why: Short sales and foreclosures have grown to comprise roughly 30 percent of the homes sold on today's market, even higher in some areas. The average sale price of foreclosed homes was 32% lower than the average sale price of non-foreclosed homes, at last count. However, it's not always the case that foreclosed homes or short sales - homes which are being sold for less than what the seller owes on their mortgage(s) - offer the buyer a fabulous discount.

Mortgage servicers and asset managers who make decisions about distressed properties are on the hook to their investors to recoup as close as possible to the current fair market value of every home they sell. Some banks even have a general rule of rejecting offers more than 10 percent or so below the home's list price, preferring instead to reduce the price by that amount and put the home back on the open market to see if any new buyers are activated by the price reduction to make an offer better than the lowball offer that was initially put on the table. On short sales, the bank is trying to get as close as possible to recovering what the seller owes - and may or may not be concerned with what the fair market value of the home is. (Nine times out of ten, there will be a big gap between fair market value and the seller's outstanding mortgage balance. If there wasn't, the seller wouldn't need to do a short sale!)

With so many distressed properties and homes with depressed values on the market, in many areas, the individual, non-distressed home sellers who are putting their homes up for sale right now are those who are very motivated to sell. Further, they are more likely to be flexible with you on everything that is negotiable, from contingency and escrow periods, to price, to repairs and included items.

Also, individual sellers can be emotionally motivated to sell to move on with their lives, get into their bigger (or smaller) house, or move on to their next job; banks, on the other hand, aren't people (!), so lack that emotional sense of urgency to get the properties sold, no matter how urgently you may think they should be trying to get rid of the foreclosed properties they own. (If you've heard the old advice that banks don't want to be in the home-owning business, I can tell you this. That is true, in a very general sense, but now they are and will be - for a long time to come. They have no emotions, have no urgent need to sell or move, and are not willing to give houses away at pennies on the dollar to get out of it, no matter what those infomercial folks say.)

Long story short: you can sometimes negotiate a better deal with an individual seller on a "regular" sale than with a bank on a distressed home sale. So, don't limit your house hunt to foreclosures and short sales, if you're looking for a good deal on your home.

Stage Four: Negotiations
Insider Secret: Your family and friends can cause you to lose your dream home.
Why: With so much information on the web and the news every day about the recession and the buyer's market, everyone seems to be an armchair economist/real estate savant. But much of that news is national and based on medians, averages and trends. That is, it might not necessarily apply to every home on the market in every city, and more importantly, it might have nothing to do with "your" particular home.

When I was a little girl, my best friend's grandfather would very carefully hand each of us a quarter, always doling it out with the sage admonition: "Don't spend it all in one place." We'd always smile, look at each other, then go ask our Moms for ten bucks apiece. In the same vein, people who are not currently in the market for a home have no idea what an individual home should "go for." If you tell your parents, church pals, or colleagues at work the blow-by-blow details of your offer, counteroffers, etc., you should expect to hear things like, "Oh, you're paying way too much!", "I think you should push them down another $10K," or "You know, you're in a better bargaining position than that." And sometimes, taking that sort of advice will end up blowing your deal. Work with your trusty real estate broker or agent to develop a smart strategy - with their experience in your local market - about what price and terms to offer. Then keep working with them to manage and maintain realistic expectations as you proceed through negotiating the contract to buy your home.

Stage Five: Escrow, Inspections and Underwriting
Insider Secret: It's critical that you attend your home inspections.
Why: When it comes to inspections, many first-time buyers expect that a home will either pass or fail. Except in a few jurisdictions where the government imposes certain condition requirements for a home to be sold, the home inspection is more about educating you, the buyer, as to the details and nuances of the home's condition than about seeing if the place hits a particular target for "good" or "bad" condition.

Home inspectors don't just look for things that need fixing, they also look to understand the home's systems and features, as well as to point out areas that will require your ongoing maintenance, highlight emergency shutoffs and other need-to-knows, and indicating where you should have specialists further inspect items of concern. Many home inspectors create vivid, detailed electronic reports - some, complete with color photos. But that's not enough!

If you're physically onsite at the home during the inspections, the inspector can physically show you the shutoffs for water, gas and electric - and how to use them. They can also point out, in person, any things that need repair, and give you some tips for maintaining the place in tip-top shape. Also, in many states, the general home inspector is legally prohibited (vs. the pest, roof or other "specialty" inspectors) from issuing a written quote or bid for repairs, to avoid a conflict of interest where they'd try to fabricate flaws in the home to get the repair job. However, the repair costs are one of the most important things a smart buyer wants to know!

If you show up, many inspectors will give you a rough range it would cost you to do various repairs, or otherwise indicate to you whether the needed repairs are "big deal" or "$10 home improvement store" fixes; some will even give you a few references to contractors they trust.

All around, you'll get much more of the detailed information you need to know whether and how to move forward with the transaction if you should up in person to the home inspections, rather than just waiting for a copy of the report to come to your email.

SAFE Act

Is it true that a seller can no longer offer owner financing to a buyer?

The answer is “It depends.” In 2008 the Secure and Fair
Enforcement for Mortgage Licensing Act, commonly referred to as the SAFE
Act, was enacted. The SAFE Act requires licensing or registration of loan
originators. This legislation led to a variety of activities related to
implementation, including indirectly imposing requirements on seller
financing and legislative and regulatory activity at the state level.
The SAFE Act was intended to enhance consumer protection and reduce
fraud.

The law required states to establish loan originator licensing
requirements with respect to residential mortgage loans made primarily for
personal, family or household use. Loan originators who are employees of
banks are subject to less onerous registration requirements. All states,
including Maryland, have enacted legislation requiring licensing through the
Nationwide Mortgage Licensing System and Registry (NMLSR).

The SAFE Act does not exempt individuals who choose to finance the sale of
residential property they own (often referred to as seller financing), but HUD
guidelines and its proposed rule do exempt from licensing requirements
individuals selling their own residence.

The SAFE Act exempts from licensing:

1. Homeowners selling and financing their own residence. HUD does not
limit this exemption to a principal residence, so the sale of a vacation
home with seller financing is also exempt.
2. Homeowners who are real estate licensees and are selling their residence
with seller financing, to the extent they are performing real estate
brokerage activities, not lending activities compensated by a lender. This
means that the vast majority of REALTORS® are NOT required to be
licensed as loan originators.
3. Real estate owners selling property to someone who intends to use the
property as a rental. Investors selling non-residential property, with seller
financing, are also exempt. These categories are exempt because the
financing must be primarily for personal, family, or household use to
trigger the licensing requirements.

Now let’s look at who’s not exempt:
1. If you own real estate other than your own home and want to provide
seller financing for the sale of the property to a buyer who plans to use the
property as their residence, you are not exempt.
2. If you provide financing for a property you do not own, you are not
exempt.
In other words, anyone who wants to provide seller financing for a residential
property to a buyer who will use the property for personal, family or household
uses is not exempt from the loan origination licensing requirements under the
SAFE Act, unless they are selling their own home.

In response to the SAFE Act, the 2009 Maryland General Assembly revised
the State’s mortgage lender and mortgage loan originator laws. Chapter 4 of
the Acts of 2009: 1) altered the licensing requirements, initial license terms,
and renewal license terms for mortgage lenders and mortgage loan originators;
2) required applicants and licensees to submit certain information and fees to
the Nationwide Multistate Licensing System and Registry (NMLSR); 3)
increased civil penalties for violations of the mortgage lender and mortgage
loan originator laws; and 4) authorized the Commissioner of Financial
Regulation to issue interim mortgage loan originator licenses and affiliated
insurance producer/mortgage loan originator licenses.
Chapter 4 also requires an applicant for a mortgage lender or mortgage loan
originator license to provide the NMLSR with fingerprints for a criminal
history background check and established pre-licensing education,
pre-licensing testing, and surety bond requirements for mortgage loan
originators

4 Traps of Foreclosure Buyers Need to Know

Interest in buying a foreclosed home is on the rise, but so are concerns about the risk involved in the process. In a December survey, Trulia found that 49 percent of Americans were at least somewhat likely to consider buying a foreclosure, up from 45 percent in May 2010. But the number of US adults who believed there are disadvantages to buying foreclosures had also increased, from 78 percent to 81 percent over the same time frame. Among those folks who had qualms about purchasing a foreclosure, the top concerns were:

•that buying a foreclosure might involve hidden costs,
•that the buying process itself is risky, and
•that the home might continue to lose value, after escrow closes.

While there certainly are risks that run with buying a foreclosed home, the most risky way to do it is also the least common method: at the foreclosure auction itself. Auction buyers often don't have the opportunity to fully vet the foreclosure to ensure that they are receiving clear title and/or to make sure they're not getting a lemon. With that said, most foreclosures are resold not at the foreclosure auction, but as an REO (short for Real Estate Owned - by the bank), listed by a real estate broker on the Multiple Listing Service and on Trulia!

When you buy an REO in this way, you have lots of opportunities to use some tricks of the trade, so to speak, to avoid some of the traps you may fear. Here are my Top 4 Tricks and Traps for Foreclosure Buyers:

1. As-is means as-is, period. (Most of the time.) Banks have very little interest, inclination or even the logistically necessary resources to execute repairs on your home. Many of these homes are managed by an asset management company in another state, and may not even have a local person besides the agent who can handle large repairs. Generally speaking, bank-owned homes are sold on a very strict "as-is, where-is" basis, which just means that you should expect to take possession of it, if you buy it, in exactly the position and location it is, no matter how defective. Do not walk into a viewing of a foreclosed home, notice how the plumbing is all ripped out of the wall, and make an offer for it, assuming you'll be able to get the bank to "fix" the issue later. Usually, if the bank is willing to do any repairs to a foreclosed home, they do so, on the advice of the listing agent, prior to the home being listed.

Out of hundreds of foreclosure transactions I have personally been involved in, I have seen exactly four where the bank did agree to do some level of repairs at a buyer's request. Every one of those times, the repair was to fix a health-and-safety endangering property defect, like a gas-leak or an electrical fritz. And every one of those times, the property defect was highly non-obvious - not something even a diligent buyer could have detected visually prior to making an offer. Maybe another few times I've seen a bank agree to a small price reduction due to surprising condition problems. And dozens of times, I've seen transactions fall apart or buyers take on the property’s repair costs, when they request repair credits, price reductions or actual repairs from the ban seller.

If a foreclosure you're considering has obvious property damage, have your contractor stop by with you or gather whatever information you need to get as comfortable as possible with your offer price, assuming that the bank will not be chipping anything in for repairs, before you make the offer.

2. The bank speaks no evil. When it comes to real estate disclosures, the fact is, the bank speaks not much of anything! Many states exempt banks and other types of corporate homeowners from making substantive disclosures about the condition of the property. Even in jurisdictions where the bank is not legally exempt, most banks will simply write across the required disclosures something to the effect that the bank has no knowledge of the property's condition. (Before you protest with a "that's not fair!!" keep in mind that the bank never lived in the property, so most often truly does have no idea of any important facts or details about its condition or location, the things an average home seller would be required to disclose.)

Even in a normal transaction, it behooves a buyer to be thorough in having the property inspected and meticulous about reviewing the resulting inspection reports. But buying a foreclosure ups even that ante, as you have no seller disclosures to highlight particular problems you should have looked at, and none of the usual legal recourse you would have if a “regular” seller made incomplete disclosures. Get a property inspection. A pest inspection. A roof inspection. A sewer line inspection. A pool inspection, if you have a pool and care about its condition.

Yes - all these inspections cost money, but the drama and thousands each of them can save you is well worth it. And read your state’s buyer inspection advisory or similar document (ask your agent), just to make sure you’re aware of all the inspections that are available to you, and work with your agent to determine which ones make sense, and which are not appropriate.

Some insider tips:

•Vacant foreclosures often have their utilities disconnected. Work with your agent to make sure the utilities get turned on - even for a single day - so that your property inspector can run the water taps, test the stove and dishwasher, see if the water heater and electrical outlets work, and so forth.

•If appliances are there, the bank will probably leave them there, even though they may not have technical “legal” ownership of them, so they may not be included in the contract, like in a "normal" home sale.•However, the bank will not give you any sort of warranty on appliances, so try to obtain any warranty coverage you want or need elsewhere - from a home warranty company or, potentially, the original manufacturer/retailer.

3. The contract terms, they are a changin'. One thing squarely in the wheelhouses of local real estate pros are local market standard practices. From negotiating practices to which party pays which closing costs, every market is different, and experienced local agents are experts on this information. If you’re buying a foreclosure, though, the bank will often require you to use it’s own purchase contract, rather than the more commonly used state forms. Many times, this is done to advise the buyer of the bank’s refusal to make substantive disclosures (see above) and to change some of the normal practices for your area to the bank’s standard practices.

For instance, if you are buying a home in a contingency state, where you would usually have to sign a document proactively releasing contingencies, the bank’s contract will probably change that, so that your transaction operates on an objection period. In "objection" based transactions, you have a certain period of time in which you must either speak up about your concerns with the property and/or cancel the deal, or you will automatically be presumed to be moving forward with the deal and your deposit money will be forfeited if you change your mind after that date.

If you’ve been making offers on non-foreclosures on the standard contract form, or you’ve bought homes before and think you know the drill, please - I implore you - READ every word of the contract you sign when you buy a home from the bank, and ask your broker, agent or attorney to explain anything that doesn’t make sense.

4. Expect the unexpected. When you buy a foreclosure, you might end up working with the bank’s escrow company, instead of a company you or your agent selects. And the bank's escrow provider might be slow or disorganized. C’est la vie. The bank might rush you for your deposit money, but take their own sweet time coming up with the necessary signatures on their end to close the deal. Par for the course. You might expect that the bank would be desperate for buyers, and instead find out that there are 20 offers on the same REO. Or, you might be the only offer and still get your aggressively low (but still reasonable) offer rejected, only to have the bank reduce the list price of the home to the same price of your offer! (They often want to see if exposing it to other buyers at the new, lower list price might generate more interest and higher offers.)

When you’re buying a foreclosure, expect glitches, expect your calendar to be derailed, expect the bank to be inflexible and possibly even unreasonable. It’s not overkill to ask your broker or agent to brief you on the common complications they see in REO transactions. Having realistic expectations may keep you from pulling your hair out. And if the transaction turns out to run smooth as silk? You’ll be pleasantly surprised.

Grant Money (up to $7.5k) for a downpayment for the First-time buyers available in 2011

Good news for the first time buyers!
The borrowers get up to $25000.00 towards the downpayment that is forgivable (don’t have to pay it back!)

-can not have owned a home within the past 3 years
-must have 640 credit score
-must take a short homebuyers class
-must be their primary residence, no rental properties
-income restriction similar to grant

Call Tatyana to get them before they run out....